Great Depression,Great DepressionEncyclopædia Britannica, Inc.worldwide economic downturn that began in 1929 and lasted until about 1939. It was the longest and most severe depression ever experienced by the industrialized Western world, sparking fundamental changes in economic institutions, macroeconomic policy, and economic theory. Although it originated in the United States, the Great Depression caused drastic declines in output, severe unemployment, and acute deflation in almost every country of the world. Its social and cultural effects were no less staggering, especially in the United States, where the Great Depression represented the harshest adversity faced by Americans since the Civil War.

Economic history

The timing and severity of the Great Depression varied substantially across countries. The Depression was particularly long and severe in the United States and Europe; it was milder in Japan and much of Latin America. Perhaps not surprisingly, the worst depression ever experienced by the world economy stemmed from a multitude of causes. Declines in consumer demand, financial panics, and misguided government policies caused economic output to fall in the United States, while the gold standard, which linked nearly all the countries of the world in a network of fixed currency exchange rates, played a key role in transmitting the American downturn to other countries. The recovery from the Great Depression was spurred largely by the abandonment of the gold standard and the ensuing monetary expansion. The economic impact of the Great Depression was enormous, including both extreme human suffering and profound changes in economic policy.

The Depression affected virtually every country of the world. However, the dates and magnitude of the downturn varied substantially across countries. Table 1 shows the dates of the downturn and upturn in economic activity in a number of countries. Table 2 shows the peak-to-trough percentage decline in annual industrial production for countries for which such data are available. Great Britain struggled with low growth and recession during most of the second half of the 1920s. Britain did not slip into severe depression, however, until early 1930, and its peak-to-trough decline in industrial production was roughly one-third that of the United States. France also experienced a relatively short downturn in the early 1930s. The French recovery in 1932 and 1933, however, was short-lived. French industrial production and prices both fell substantially between 1933 and 1936. Germany’s economy slipped into a downturn early in 1928 and then stabilized before turning down again in the third quarter of 1929. The decline in German industrial production was roughly equal to that in the United States. A number of countries in Latin America fell into depression in late 1928 and early 1929, slightly before the U.S. decline in output. While some less-developed countries experienced severe depressions, others, such as Argentina and Brazil, experienced comparatively mild downturns. Japan also experienced a mild depression, which began relatively late and ended relatively early.

Dates of the Great Depression in various countries (in quarters)

country

depression began

recovery began

United States

1929:3

1933:2

United Kingdom

1930:1

1932:4

Germany

1928:1

1932:3

France

1930:2

1932:3

Italy

1929:3

1933:1

Japan

1930:1

1932:3

Canada

1929:2

1933:2

Belgium

1929:3

1932:4

The Netherlands

1929:4

1933:2

Sweden

1930:2

1932:3

Switzerland

1929:4

1933:1

Denmark

1930:4

1933:2

Poland

1929:1

1933:2

Czechoslovakia

1929:4

1933:2

Argentina

1929:2

1932:1

Brazil

1928:3

1931:4

India

1929:4

1931:4

South Africa

1930:1

1933:1

Peak-to-trough decline in industrial production in various countries (annual data)

country

decline

United States

46.8%

United Kingdom

16.2%

Germany

41.8%

France

31.3%

Italy

33.0%

Japan

8.5%

Canada

42.4%

Belgium

30.6%

The Netherlands

37.4%

Sweden

10.3%

Denmark

16.5%

Poland

46.6%

Czechoslovakia

40.4%

Argentina

17.0%

Brazil

7.0%

The general price deflation evident in the United States was also present in other countries. Virtually every industrialized country endured declines in wholesale prices of 30 percent or more between 1929 and 1933. Because of the greater flexibility of the Japanese price structure, deflation in Japan was unusually rapid in 1930 and 1931. This rapid deflation may have helped to keep the decline in Japanese production relatively mild. The prices of primary commodities traded in world markets declined even more dramatically during this period. For example, the prices of coffee, cotton, silk, and rubber were reduced by roughly half just between September 1929 and December 1930. As a result, the terms of trade declined precipitously for producers of primary commodities.

Recovery in the rest of the world varied greatly. The British economy stopped declining soon after Great Britain abandoned the gold standard in September 1931, although genuine recovery did not begin until the end of 1932. The economies of a number of Latin American countries began to strengthen in late 1931 and early 1932. Germany and Japan both began to recover in the fall of 1932. Canada and many smaller European countries started to revive at about the same time as the United States, early in 1933. On the other hand, France, which experienced severe depression later than most countries, did not firmly enter the recovery phase until 1938.

Click anywhere inside the article to add text or insert superscripts, subscripts, and special characters.
You can also highlight a section and use the tools in this bar to modify existing content:

Add links to related Britannica articles!
You can double-click any word or highlight a word or phrase in the text below and then select an article from the search box.
Or, simply highlight a word or phrase in the article, then enter the article name or term you'd like to link to in the search box below, and select from the list of results.

Note: we do not allow links to external resources in editor.
Please click the Web sites link for this article to add citations for
external Web sites.